- Netflix acquires Warner Bros and HBO Max
- New regulatory risk emerages
- Big purchases will likely put pressure on company earnings
- Netflix acquires Warner Bros and HBO Max
- New regulatory risk emerages
- Big purchases will likely put pressure on company earnings
Netflix announced the finalization of the purchase agreement for the legendary Warner Bros, the company stated in a Friday announcement. The transaction will also include the HBO Max service and related assets. The new acquisition will ultimately cost Netflix 72 billion dollars.
Netflix's acquisition of one of its competitors noticeably increases Netflix's market share. The merger allows Netflix to take a noticeable lead and once again become the undisputed leader in streaming — at least in terms of market share.
However, investors initially react with skepticism. The stock price temporarily dropped by as much as 5% before returning to around the opening session level. Why?
The merger of two such large entities will attract the attention of regulators not only in the USA but also abroad. Control over such a large segment of the market raises serious concerns about real competition in the market. As a result, some investors are already starting to price in a premium for the newly emerged risk.
It is difficult to estimate with any degree of certainty the ultimate impact of Netflix's new acquisition on the market. If regulatory risk does not materialize, this could be the beginning of Netflix's journey to once again becoming the "default" streaming platform. At the same time, such a large purchase will exert significant pressure on the company's financial reporting.
NFLX.US (D1)
Source: xStation5
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